An
unsolved budget showdown over the funding of Obamacare
became an actual shutdown of federal operations at the stroke of midnight, triggering closures of everything from national parks to veteran affairs to passport services. Immediate furlough orders were expected to affect hundreds of thousands of staff and contract workers.

A last-minute proposal by House Republicans to set up a “conference” — a bilateral negotiating panel — to work out a deal was rejected, with Senate Majority Leader Harry Reid calling it negotiating “with a gun to our head.”

But with American anger rounding fiercely on Congress — and with Republicans bracing for the brunt of blame — many in Washington are hoping for the crisis to break before it begins to spill over into Canada in the form of economic slowdown.

“It all depends how long this lasts. A couple of hours or a couple of days, I would characterize as an inconvenience to Canada,” said Scotty Greenwood, a senior trade specialist with McKenna, Long & Aldridge LLP.

“If it drags out longer, if we begin to see a significant impact on the U.S. economy, it becomes an obvious problem for Canada and Canadians. The two economies are now so intermingled and intertwined, you just don’t want to go there.”

The political theatrics centred on the Republican-controlled House of Representatives, which late Monday sent its latest budget back to the Senate, including a one-year delay in the full implementation of the 2010 Affordable Care Act, President Barack Obama’s signature legislative achievement. Coming barely three hours before midnight, the rejecting vote all but assured shutdown.

With new polls this week suggesting barely one in 10 Americans approve of the work of this Congress, some House Republicans began turning on their own kind, fearing eventual electoral backlash.

California Rep. Devin Nunes described his most intransigent GOP colleagues as “lemmings with suicide vests. They have to be more than just a lemming. Because jumping to your death is not enough.”

Nunes described the polarized situation to the Washington Post: “You have this group saying somehow if you’re not with them, you’re with Obamacare.”

As the brinkmanship built, Obama delivered a final warning to Republican lawmakers, saying the health care overhaul is here to stay and he would offer no compromise on what should be a routine budget matter.

“You don’t get to extract a ransom for doing your job, for doing what you’re supposed to be doing anyway … just because there’s a law there that you don’t like,” Obama told reporters.

The shutdown adds uncertainty to already jittery financial markets. It is the first closure of its kind since 1995, when then-House speaker Newt Gingrich led Republicans on a 21-day closure of all but essential federal operations.

But the estimated economic impact resulting from a U.S. government shutdown economy — initially projected to be much as $1 billion a day — pales before fears of a U.S. debt default should the brinkmanship in Washington extend to Oct. 17, the deadline for Congress to extend the U.S. debt ceiling so the government can continue paying its bills.

“People talk about how the shutdown is a train wreck. But the real wall is the debt ceiling — that’s when the train hits the wall, with unprecedented consequences,” said former Canadian diplomat Paul Frazer, now a Washington consultant.

“The difference in the magnitude of these two events cannot be overstated. A short shutdown is one thing. We’ve seen them before. A U.S. debt default, we haven’t.”

But with sabre-rattling rejectionism the norm in Washington these days, Frazer said another worrying dimension is the degree to which Americans appear to have tuned out the continuing political drama.

“They’ve seen it so many times it doesn’t seem to resonate to the same degree. I think in some ways Americans are shaking their heads and saying, ‘A pox on all your houses,’ ” said Frazer.

“But it isn’t just a question of markets being jittery. In a worst-case scenario, the danger of default risks serious damage to retirement savings on both sides of the border.

“Everyone gets that the Republicans don’t like health-care reform. What they need to do is come with a constructive alternative and go out and win an election. Killing it through torture is not the answer.”